The spectre of deflation: a review of empirical evidence

Abstract What explains the widespread fear of deflation? This article reviews the history of thought, economic history, and empirical evidence on deflation, with a view to answering this question. It also outlines informally the main effects of deflation in applied monetary models. The main finding is that – for both historical and contemporary deflations – there are many open, empirical questions that could be answered using the tools economists use to study inflation and monetary policy more generally.     

Concentration on the nearby contract in financial futures markets: A stochastic model to explain the phenomenon

A stochastic model is developed to explain how the early unwinding propensity of market participants in financial futures markets can lead to a strong concentration of the trading volume on the nearby contract. In this model the position closing behavior of the market participants is captured by three distribution functions. The concentration process works under many realistic specifications of these distribution functions. The authors would like to thank Wolfgang Bühler (University Mannheim) and Michael Brennan (UCLA/Los Angeles) for valuable discussion and the Deutsche Forschungsgemeinschaft (DFG) for financial support.     

Person-level assessment of measurement invariance

Quality & Quantity - Existing procedures for testing measurement invariance focus mainly on group-level comparisons rather than individual comparisons (i.e., the main conclusion typically...     

The Business Value of Process Flexibility

Promising to cope with increasing demand variety and uncertainty, flexibility in general and process flexibility in particular are becoming ever more desired corporate capabilities. During the last years, the business process management and the production/operations management communities have proposed numerous approaches that investigate how to valuate and determine an appropriate level of process flexibility. Most of these approaches are very restrictive regarding their application domain, neglect characteristics of the involved processes and outputs other than demand and capacity, and do not conduct a thorough economic analysis of process flexibility. Against this backdrop, the authors propose an optimization model that determines an appropriate level of process flexibility in line with the principles of value-based business process management. The model includes demand uncertainty, variability, criticality, and similarity as process characteristics. The paper also reports on the insights gained from applying the optimization model to the coverage switching processes of an insurance broker pool company.     

Union Involvement in Workplace Change: A Comparative Study of Local Unions in Canada and Mexico

This paper examines the sources of local union power to cope with workplace change. Are workplace unions active participants, merely passengers, outright opponents, or entirely excluded from the change process? Drawing on 18 case studies and a survey conducted in the auto and metalworking industries in Mexico and Canada, the results suggest that greater internal solidarity, stronger articulation with other levels of union and community activity and the pursuit of an autonomous agenda all provide the basis for enhanced local union bargaining power in the context of globalization. This general conclusion applies to Canadian as well as Mexican local unions and suggests analytical paths for understanding the construction and renewal of union power.     

Transfer problem dynamics: Macroeconomics of the Franco-Prussian war indemnity

We study the classic transfer problem using the largest historical example, the Franco-Prussian War indemnity of 1871-1873 which saw France transfer to Germany 25% of a year's GDP. A dynamic, two-country model allows for debt finance, supply-side effects, and controls for wartime spending. The model can fit the historical paths of French net exports and the terms of trade. But explaining French output and consumption requires additional shocks. These results illustrate the usefulness of the DSGE approach to the transfer problem and provide striking evidence of the importance of international capital markets in the 19th century.     

Borders and Governance: An Analysis of Health Regulation and the Agri-food Trade

The contemporary dynamics of states, borders, and markets suggest the need for non-traditional methods of regulation and international cooperation in areas such as border inspections and management. The emerging literature on cross-border regions and multi-level governance suggests a framework to understand this development within the general transformation of states under globalisation. To explore these ideas, in this article we focus on the arena of health regulation and the international agricultural and food trade. Multilateral bodies such as the World Trade Organization (WTO), the World Organization for Animal Health (OIE), and the International Plant Protection Convention (IPPC) have endorsed the policy concept of “regionalisation” as a means by which states can preserve trade relations when sanitary (human or animal health) or phytosanitary (plant health) hazards threaten a country's trading status. In this paper, two cases – one historical and one contemporary – illustrate that regionalisation offers a largely functional application of multi-level governance to enhance regulatory and trade capacity. We conclude that governance changes indicated by regionalisation may provide further evidence for the transformation of borders, regions, and states in an era of globalisation.     

Pooling forecasts in linear rational expectations models

Estimating linear rational expectations models in a limited-information setting requires replacing the expectations of future, endogenous variables either with instrumented, actual values or with forecast survey data. Applying the method of Gottfries and Persson [Empirical examinations of the information sets of economic agents. Quarterly Journal of Economics 103, 251–259], I show how to augment these methods with actual, future values of the endogenous variables to improve statistical efficiency. The method is illustrated with an application to the US hybrid new Keynesian Phillips curve, where traditional, lagged instruments and the median forecast from the Survey of Professional Forecasters both appear to miss significant information used by price-setters, so that forecast pooling with actual values improves the statistical fit to inflation.